Redknee Solutions Inc. Raises Cdn$96 Million

TORONTO, Sept. 6, 2017 /CNW/ – Redknee Solutions Inc. (“Redknee” or the “Company”) (TSX: RKN) announces that it has closed its previously announced rights offering to holders of its subordinate voting shares (the “Rights Offering”). Under the Rights Offering, an aggregate of 108,519,936 subordinate voting shares were issued at a subscription price of Cdn$0.63 per share for gross proceeds to the Company of approximately Cdn$68 million. The net proceeds of the Rights Offering will be used to fund a restructuring of the business in furtherance of the previously announced strategic plan (the “Strategic Plan”).

The Rights Offering was over-subscribed prior to ESW Capital, LLC (“ESW”) exercising its additional rights and, as such, Wave Systems Corp. was not required to fulfill its obligations under the standby purchase agreement. ESW exercised all of its rights received as a shareholder under the basic subscription privilege as well as all of the rights to which it was entitled under the additional subscription privilege.

Pursuant to the right previously granted to ESW to maintain its pro rata interest in the Company, ESW has agreed to subscribe for an additional 44,604,981 subordinate voting shares at a price of Cdn$0.63 per share for additional aggregate gross proceeds to the Company of approximately Cdn$28 million (the “Subsequent ESW Issuance”). The Subsequent ESW Issuance is scheduled to close on or about September 12, 2017.

The following table presents the holdings of subordinate voting shares by ESW and its affiliates before and immediately following the completion of the Rights Offering and the Subsequent ESW Issuance:

Security Type

ESW Holdings before the
Rights Offering

ESW Holdings after the
Rights Offering and the
Subsequent ESW
Issuance

Subordinate Voting Shares

14,106,300 (13.00%)

73,842,555 (28.2%)

The shareholdings above are presented on a non-diluted basis. Following the Rights Offering and the Subsequent ESW Issuance, ESW and its affiliates will beneficially own and control approximately 39.5% of the issued and outstanding subordinate voting shares, on a partially diluted basis. As a result of the completion of the Rights Offering and the Subsequent ESW Issuance, the exercise price of the warrant issued to Wave Systems Corp. (the “Wave Warrant”) in January 2017 will be reduced from US$1.30 to US$0.68. The Wave Warrant entitles the holder thereof to acquire 46,285,582 subordinate voting shares.

Details of the Rights Offering

Under the Rights Offering, 101,622,337 subordinate voting shares were distributed pursuant to the basic subscription privilege, of which, to the knowledge of Redknee after reasonable inquiry, approximately 31,193,141 subordinate voting shares were distributed to shareholders who were insiders prior to the distribution or shareholders who became insiders as a result of the distribution under the Rights Offering, and approximately 70,429,196 subordinate voting shares were distributed to the remaining subscribers.

Under the Rights Offering, 6,897,599 subordinate voting shares were distributed pursuant to the additional subscription privilege, of which, to the knowledge of Redknee after reasonable inquiry, approximately 1,103,871 subordinate voting shares were distributed to shareholders who were insiders prior to the distribution or shareholders who became insiders as a result of the distribution under the Rights Offering, and approximately 5,793,728 subordinate voting shares were distributed to the remaining subscribers.

Upon closing of the Rights Offering and following the closing of the Subsequent Issuance Right, a total of 261,644,853 subordinate voting shares of Redknee will be issued and outstanding.

The Services Agreements

Upon closing of the Rights Offering, the Company entered into the previously announced services agreements with Crossover Markets, Inc. (“Crossover”) and DevFactory FZ-LLC (“DevFactory”), which consisted of (i) a services agreement with Crossover pursuant to which Crossover will provide the Company with access to service providers, and (ii) a technology services agreement with DevFactory pursuant to which DevFactory will provide certain technology services to the Company.

Board of Directors

The Company also announces that the board of directors (the “Board”) has accepted Mr. Keith Graham’s resignation as director of the Company, effective immediately.

Remaining on the Board are Scott Brighton (Chairman), Demetrios Anaipakos, Chris Helling, Farhan Thawar, Andrew Price and Christy Jones. The Company is actively pursuing a replacement lead independent director to fill the Board vacancy.

About Redknee

Redknee monetizes today’s digital world for communications service providers. Our market-leading portfolio of monetization and subscriber management solutions includes real-time billing, charging, policy and customer care modules and is available on premise, cloud-based, or as Software-as-a-Service. With a central focus on driving customer success, Redknee’s products power growth and innovation for operators globally. Established in 1999, Redknee Solutions Inc.(TSX: RKN) can be found on the Toronto Stock Exchange. For more information about Redknee, please go to www.redknee.com.